By Paul Homewood
h/t Philip Bratby
The UK’s leading offshore wind developer is in talks with Net Zero Secretary Claire Coutinho about the fate of its flagship project off the coast of Norfolk, after spiralling costs cast doubt over its viability.
Ørsted, the Danish renewable energy giant, is understood to be in talks with the Department for Energy Security and Net Zero, led by Ms Coutinho, about securing more generous subsidy arrangements for its Hornsea 3 wind farm project.
It would see 231 turbines installed off the coasts of Norfolk and Lincolnshire, generating power for 3m homes.
Subsidies for Hornsea 3 were agreed with the Government last year through contracts for difference (CfDs), with operators guaranteed a minimum price per megawatt hour (MWh) known as the strike price. Ørsted was promised £37.35.
However, the wind industry has been hammered by inflation of up to 40pc since then. Building Hornsea 3 would now put Ørsted at risk of significant losses and executives warned earlier this year that they needed more government support to keep the project alive.
The UK government is preparing to publish details of its next “allocation round” for new renewable energy project subsidies, including offshore wind. The announcement is expected this week and should confirm the strike price has been raised to above £70.
The last round offered a strike price of £44 for offshore wind and attracted no bidders.
In y view, the government should tell them to take a running jump. If they cave in to the Danish wind company, it will simply encourage all the others who have signed contracts or will in future to demand more money every time they suffer losses.
Orsted are big enough to withstand any losses at Hornsea, and if they are not, then the Danish government should bail them out, not British taxpayers. And if Orsted simply pull out, our government should tell them they will not be considered for any future auctions.
But above all, what this latest episode illustrates is just how poorly these contracts were drafted in the first place by Ed Davey. CfDs put no legal obligation on wind farms to actually activate the contracts, or even construct them. By contrast, in the US Orsted and others have had to pay billions in financial penalties for breaking supply contracts.
Onr final comment. The Telegraph still does not seem to be aware that all the prices they have quoted are at 2012 prices. The £70/MWh, for instance, actually means a current price of around £100/MWh.
via NOT A LOT OF PEOPLE KNOW THAT
November 15, 2023 at 03:18AM
Iowa Climate Science Education 